US and UK strike zero-tariff deal on pharmaceuticals, UK to pay more for medicines

The US and UK agree on a zero-tariff deal for pharmaceuticals, boosting trade and investment in medical technology.

The United States and the United Kingdom announced a landmark agreement on Monday to eliminate tariffs on pharmaceutical products and medical technology, a move aimed at fostering investment and innovation in both countries. Under the deal, the UK will increase the net price it pays for new medicines by 25%, while British-made medicines, drug ingredients, and medical technology will be exempt from U.S. Section 232 tariffs.

The agreement also involves a significant change to the UK’s cost-effectiveness framework under NICE, which evaluates new drugs for the National Health Service (NHS) using the “quality-adjusted life year” measure. The threshold for cost-effectiveness remains at £30,000 ($39,789) per year of healthy life, but the rebate rate under the voluntary pricing scheme will decrease to 15% in 2026.

U.S. Trade Representative Jamieson Greer said the negotiated outcome will drive investment and innovation in both nations. The deal comes amid long-standing pressure from U.S. officials, including President Donald Trump, for European countries to pay more for American medicines. The pharmaceutical industry has previously criticized the challenging UK operating environment, with some major firms, including AstraZeneca, pausing or cancelling investments.

This agreement is expected to reshape the pharmaceutical trade landscape between the two countries, balancing higher UK medicine spending with broader market access and tariff exemptions.